Liberal Democrat Shadow Chancellor, Vince Cable says there is no reason why Northern Rock should not be re-mutualised, as long as it guarantees to repay the government.
Speaking today about the party’s plans for the banking sector if elected, he says the Liberal Democrats are not anti bank or anti banker.
Cable says as chancellor he would devise a fresh and consistent mandate for the nationalised and semi nationalised banks.
He argues that that Royal Bank of Scotland and Lloyds are key to supporting the British economy and are currently falling well short of their lending agreements.
He challenges Alistair Darling to give a full public account of these agreements on their respective anniversaries.
Cable says: “A strong case is being made for transferring nationalised Northern Rock back into a mutual.
“Our objection has been that mutualisation of the nationalised banks does not produce the return of cash to the taxpayer, but we must remember Northern Rock is in a very different situation to Lloyds and RBS.
“£23bn of government money has been pumped into Northern Rock vastly in excess of its market worth even at the height of the credit boom. There is no way this money will ever be recouped purely from a re-flotation.
“As long as the Rock was re-mutualised in such a way to guarantee that it would continue to repay the Government, there is no reason – at least in principle – why it could not do this as a building society.”
Sweden still owns almost 20% of a bank that it bailed out in the early 1990s – Nordea, and Cable says the government should also not rule out the taxpayer taking interests in Northern Rock, Lloyds and RBS for similarly long periods.
He adds: “I can also see a long term role for some state banking, operating on the operationally independent lines of National Savings & Investment to serve the millions marginalised by the main banks, perhaps located in the Post Office Network.”